Why investing in Kenya’s future trumps gambling revenue

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Betting is a very lucrative business in Kenya and punters are cashing out big time in the country. In 2019, gamblers spent over Ksh30 billion ($224.6 million) in a single month from gambling. These gamblers staked nearly 180 million individual bets in a single month in 2019, while bookmakers like Betin Kenya and SportsPesa raked in Ksh301.3 billion ($2.25 billion) in revenue.

But the figure suddenly dropped after the government implemented policies that prioritised its people, particularly the youth, in mid-2019. So, by 2022, the revenue in the betting sector shrunk by Ksh240.7 billion ($1.8 billion) to reach only Ksh60.6 billion ($449 million). This is according to data from the Betting Control and Licensing Board (BCLB), as reported by Business Daily.

Kenya is a small country with a little over 53 million people. The country has a very young population. People aged between 18 and 35 are approximately 75% of its population, many of whom are unemployed and excluded in critical aspects of the economy. Thus, betting companies make more earnings from young people in Kenya.

The Kenya government perceiving the bookmaking sector to be highly exploitative of its young and poor began to implement policies such as the imposition of higher taxation on gambling companies, restrictions on gambling advertising and strict regulatory compliance. Kenya’s Treasury introduce a 20% tax on betting and gaming stakes in min 2019 that forced SportPesa and Betin Kenya to leave the country.

These stringent restrictions stifle business for gambling companies and sent many top gambling executives – mostly foreigners- and some gambling companies out of the Kenyan market. It further moved to clinch a portion of the funds that gamblers use to play in their mobile wallets through taxes. That also reduced people’s appetite to play. Although with reduced punting activities, the government will not earn much tax revenues from bookmakers. The move has helped to reduce gambling activities among young people.

According to a statement to the local news outlet, Peter Mbugi, Chief Executive Officer of BCLB noted that the number of gamblers has dropped sharply in the East African country.

“The number of punters reduced in terms of volumes and numbers after the companies were closed. Quite a number of people did not move. It is likely that they remained to wait for those companies to make a comeback because they had created a lot of interest and attachment to these companies,” – he said.

Gambling has posed a serious threat to many Kenyan families. In 2020, Nelson Bwire, co-Founder of the Gaming Awareness Society of Kenya, and his team submitted data to the presidential task force on mental health that highlighted gambling as a major contributor to mental health-related problems.

“The effects are devastating — family breakups, addiction, depression, unmanageable debt, increased crime and suicides. But to learn that people are spending such huge amounts on betting in such a short time? It’s absurd,” – he said in a report by Finance Uncovered.

Kenya is an emerging market and an averagely industrialised nation in East African peers. Although Kenya has one of Africa’s largest startup ecosystems, it is a middle-income nation working to be a newly industrialized nation in 2030. Agriculture remains its top earner followed by other sectors like tech, mining, manufacturing, energy, tourism and financial services.

Source:venturesafrica.com